On behalf of the Los Angeles County Economic Development Corporation (LAEDC), an organization dedicated to promoting job growth, economic expansion, and preserving the overall global competitiveness of California and Los Angeles County, I am writing to urge your support on Assembly Bill (AB) 927 (Muratsuchi), which would create a hiring tax credit for aerospace parts, components and equipment designers, assemblers and renovators to incentivize the hiring of new employees and, most especially, incentivize the hiring of veterans and service-connected disabled veterans – tens of thousands of whom are, and will continue to be, returning home to California in need of civilian-sector jobs with the winding down of combat operations in Afghanistan.

As you know, the aerospace industry has a long history in California, in Southern California and in Los Angeles County. This extremely diversified industry is comprised of small, medium and large enterprises that manufacture aircraft (civil and military), missiles, satellites and other space vehicles as well as the businesses that manufacture and distribute parts and components. But let’s not forget that this industry is more than just about planes, satellites and spacecrafts.

In California – and especially in Southern California – aerospace is truly about entire communities. California’s aerospace industry supports about 140,000 high-paying, high-skill jobs. More than 88,000 of those jobs are located in Southern California. Unfortunately, the industry has been hard hit and suffered significant job reductions over the past 20+ years. In fact, just this week we received an announcement that one of the state’s, as well as one of Los Angeles County’s, largest employers, Raytheon, is moving its space and airborne systems headquarters from El Segundo, California to McKinney, Texas.

Across California we’ve seen aerospace employment decrease by more than two-thirds from over 321,000 in 1990. And here in Los Angeles County, we’ve witnessed first-hand the destructive effects that the industry’s decline from 189,000 workers in 1990 to fewer than 60,000 in 2011 has wreaked on our local communities. Not to mention the ancillary – but enormous – repercussions that the loss of aerospace programs has had on our huge manufacturing base, as well as the state and local tax dollars lost due to these severe job declines – tax dollars that help fund critical community services and social programs. Indeed, it’s not hyperbole to say that aerospace’s loss is also our local school district’s loss.

While we have seen job losses throughout the nation in aerospace employment (much of this is due to technological innovations that have increased productivity at the expense of jobs), California has suffered a disproportionate share of those losses[1]—leaving us not only to analyze why these jobs are fleeing California at a much higher rate than other places throughout the nation, but also to devise and implement analytically-based actions policymakers can take to reverse this trend and protect these high value jobs for Los Angeles County, Southern California and the entire state of California. We see AB 927 as one of these actions policymakers can – and must – take. Although we fully understand that one tax credit program is in no way a panacea to save an industry, it will, however, help us to stanch the state’s aerospace jobs exodus and represents a sensible incentive to help attract new and grow next-generation aerospace businesses.

We must always remember that today we live and work in a global economy where location is not permanent, but by choice. In today’s highly-competitive and rapidly changing global economy we can no longer sit idly on the sidelines, witnessing the continuous exodus of businesses and the quiet attrition of the highly-skilled workforce that powers our state’s leading economic engines. For all of the above reasons, the LAEDC urges your support of AB 927—a much-needed program that helps carry on the foundation laid by the tens of thousands of aerospace workers living in and contributing to California’s communities by keeping them and their employers here.

Sincerely,

David Flaks, Chief Operating Officer

LAEDC

cc: Governor Jerry Brown

Senate President pro Tempore Darrell Steinberg

Senator Bob Huff, Republican Leader

Speaker of the Assembly John Pérez

Assemblymember Connie Conway, Republican Leader

Assemblymember Al Muratsuchi

[1] “Aerospace employment has declined across the nation since 1990, but California has suffered disproportionately. While total U.S. aerospace employment declined by 40% between 1990 and 2000, California experienced an even steeper decline, losing 57% of its aerospace workforce. Job losses were similar throughout much of Southern California with the exception of San Diego County, which experienced a drop of 70%.” – LAEDC report titled Aerospace Industry in Southern California, August 2012

About LAEDC

Los Angeles County Economic Development Corporation (LAEDC) was founded in 1981 as a nonprofit, public-benefit organization to harness the power of private sector in collaboration with L.A. County, to guide economic development and create more widely shared prosperity. LAEDC collaborates with all stakeholders in the region including education, business, and government.

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